Source: Guotai Junan Securities
Affected by the epidemic, the 2020 college entrance examination was postponed from June to July, but the heavy rainstorm made the college entrance examination more difficult this year.
According to yesterday's news report, due to multiple floods blocking the road, candidates from two test sites in She County, Anhui failed to enter the examination room smoothly, and the two tests in Chinese and maths in the morning were forced to postpone.
Many people lamented online that this year's candidates were born in SARS, were taken by the new crown, and ran to the heavy rain. It was really difficult.
Flood disasters have been staged in many provinces and cities in the south, but the continuous heavy rain is not bad news for the hydropower industry that performed poorly in the first half of the year -
"Under the continuous impact of heavy rainfall during the flood season, we expect that hydropower generation this year is expected to exceed expectations, and the big dividend hydropower sector is worth paying attention to."
01 The nationwide heavy rain mode has been launched
Since June 2, the Central Meteorological Bureau has issued heavy rain warnings for 31 consecutive days, with a duration of rare in recent years.
▼ Heavy rain warning check-in for 31 consecutive days
Image source: China Meteorological News Agency, Guotai Junan Securities Research
According to data from the Central Meteorological Bureau, a total of 250 rivers across the country have floods above the alarm, mainly concentrated in southern provinces, autonomous regions and municipalities such as Guangdong, Guangxi, Guizhou, Hunan, Hubei, Jiangxi, Sichuan, Chongqing, Anhui, etc.
▼ The southern region has suffered a lot of rain in the past 30 days
Data source: Wind, Guotai Junan Securities research
▼ The national precipitation is relatively high in the past 30 days
Data source: Wind, Guotai Junan Securities research
After only one day of suspension on July 3, on July 4 and 5, the Central Meteorological Observatory continued to issue heavy rain warnings, and a new round of heavy rainfall curtain was opened.
Central Meteorological Bureau stated that at present, the new round of rainfall belts are still mostly concentrated in the southern region, but starting from mid-July, the main rain belts in eastern my country will gradually move northward to the Huanghuai, North China, and the southern region of Northeast , which means that the north will gradually enter a period of concentrated rainfall.
The Ministry of Water Resources believes that the large-scale rainfall on
for many consecutive days has brought about significant upsurge in the upper reaches of the Yangtze River Jinsha River, Chishui River, Wujiang , and Qijiang ; the middle reaches of the Dongting Lake water system Zishui Yuanjiang Lishui, Hubei and East Sishui, Yunnan Nujiang , Lancang River , Pearl River Basin Hongshui River and other rivers have shown significant water rise.
Among them, rivers such as Wujiang and Qijiang in Chongqing may experience over-warranty floods. The upper reaches of the Yangtze River, the Three Gorges Reservoir will have obvious flooding in the reservoir, and some small and medium-sized rivers in the heavy rain area may experience major flooding.
. As for the outside world’s concerns, “Will there be a major flood like 1998 this summer?”, industry insiders said, “This is different from the past.”
Compared with 1998, the overall flood control and disaster resistance capabilities of Yangtze River Basin are very different.
Because the Three Gorges Project has been completed, many water conservancy projects in the middle and lower reaches of the Yangtze River have been built, and our awareness of disaster resistance is also very strong, and the harm caused by floods can be weakened through overall scheduling.
▼ On June 29,
Three Gorges hub started flood discharge scheduling
Picture source: Xinhua News Agency, Guotai Junan Securities research
On the other hand, some professionals pointed out that compared with the flood control pressure of main streams such as the Yangtze River and the Yellow River, the pressure on flood control this year is more reflected in small and medium-sized rivers and small and medium-sized reservoirs, especially the prominent problems of mountain torrents and urban drainage, which are weak points that need to be focused on in this flood prevention.
02 Hydropower is expected to usher in a small peak
But as for the hydropower sector, this flood season can be regarded as "long drought and rain".
In the first half of the year, due to the relatively dry water supply in several major river basins in my country, the hydropower output was poor, the hydropower generation from January to May was 355.8 billion kilowatt-hours, a year-on-year decrease of 11.3%.
▼ Hydropower generation in January-May 2020
fell by 11.3% year-on-year
Data source: Wind, Guotai Junan Securities Research
Affected by this, as one of the few sectors with strong performance certainty under the influence of the epidemic, hydropower has seriously underperformed the market since 2020.
▼ Since 2020, the trend of the hydropower sector has been significantly weaker than the market
Data source: Wind, Guotai Junan Securities Research
We believe that this flood season is expected to drive hydropower generation beyond expectations. Against the background of the increasing attention of the stagflation sector in the subsequent market, the hydropower sector is expected to usher in a rebound.
# Yangtze River Basin
Due to the increase in rainfall, the traffic in storage of Three Gorges, Gezhouba , Xiluodu , Xiangjiaba has increased rapidly since June.
▼ Three Gorges warehouse traffic has increased rapidly since June
Data source: Wind, Guotai Junan Securities research
▼ Gezhouba inventory traffic has increased rapidly since June
Data source: Wind, Guotai Junan Securities research
▼ Xiluodu warehouse traffic has increased rapidly since June
Data source: Wind, Guotai Junan Securities research
▼ The traffic flow in Xiangjiaba has increased rapidly since June
Data source: Wind, Guotai Junan Securities research
:00 on June 23, a total of 82 units of the four cascade power stations in the Yangtze River main stream of the Three Gorges Group achieved full operation for the first time in 2020.
The Three Gorges Unit was fully launched on June 21, and the time point for full launch was one month earlier than in 2019 (the Three Gorges Power Station was fully launched on July 25 in 2019).
# Yalong River basin
Since June, due to the high rainfall in Sichuan Province, the first-level inlet traffic in Jinping has increased rapidly. The current inlet traffic is significantly higher than the same period in 2019, and the water level is also significantly higher than the same period in 2019.
▼The first-level water level of Jinping in 2020
has been higher than the same period in 2019
Data source: Sichuan Provincial Hydrologic and Water Resources Survey Bureau, Guotai Junan Securities Research
According to Sichuan Provincial Department of Water Resources , the precipitation in the province will be slightly higher than the average annual value during the main flood season in 2020.
# Lancang River Basin
According to data from Kunming Power Trading Center, due to the low precipitation, the Lancang River Basin has been severely frigid from January to April, with an average of 40% to 50% compared with the years. This situation has improved after May.
According to data from the Central Meteorological Observatory, rainfall in the southwest region to the middle and lower reaches of the Yangtze River will increase again in early July, and it is expected that the water inflow in the Lancang River Basin will continue to improve.
▼ The water inlet in the Lancang River Basin has improved
Data source: Kunming Power Trading Center, Guotai Junan Securities Research
03 High-dividend big hydropower
Value highlights
In addition to the arrival of the flood season, the key recommendations of high-dividend big hydropower are also based on the following two logics.
Logic 1: Lower market interest rates are double positive for hydropower
The spread of the new crown pneumonia epidemic has accelerated the interest rate cut since 2019. At the meeting of the Political Bureau of the Central Committee on March 27, "guiding the downward trend of loan market interest rates" was also placed in the outline. Under the background of
interest rate cut, hydropower is expected to benefit both.
1) Financial expenses are expected to be reduced.
Hydropower is a heavy asset industry, with a debt ratio generally ranging from 50-70%, and financial expenses account for a relatively high proportion of total costs (about 30%).
▼The financial expenses of hydropower companies
account for a higher proportion of total costs
Data source: Wind, Guotai Junan Securities Research
Under the background of interest rate cuts, the financial expenses of hydropower companies are expected to decrease. According to our calculations, assuming that the interest rate drops by 50 bp, the performance elasticity of hydropower companies is around 3-9%.
▼ The impact of the decline in interest rates
on the performance of hydropower companies Measurement
Data source: Wind, Guotai Junan Securities Research
2) High dividend value is highlighted.
Hydropower companies have abundant cash flow, high dividend rate, and dividend rate is between 3-5%. The high dividend value is further highlighted under the background of interest rate cuts.
▼ The dividend yield of hydropower companies is relatively high
Data source: Wind, Guotai Junan Securities Research
Logic 2: A new round of hydropower installed capacity growth is coming.
On June 29, the first batch of units of the fourth and seventh largest hydropower station in China and the world - Wudongde Hydropower Station were officially put into operation after 72 hours of trial operation.
▼ Wudongde Hydropower Station is officially put into production
Picture source: CCTV News, Guotai Junan Securities research
Wudongde Hydropower Station dam site is located at the junction of Sichuan and Yunnan. It is the first of the four stages of hydropower planning in the lower reaches of the Jinsha River (the other three are Baihetan , Xiluodu and Xiangjiaba).
▼ Wudongde Hydropower Station is located in the first stage
Picture source: Interface News, Guotai Junan Securities Research
Its total installed capacity is 10.2 million kilowatts, and its annual average power generation is 38.91 billion kilowatt hours. The development tasks are mainly power generation, taking into account flood control, shipping and promoting local economic and social development.
In addition to the first batch of units of the just completed Wudongde Hydropower Station, some hydropower stations are still under construction in my country.
▼ From 2020, multiple large hydropower stations will be put into production
Data source: wind, Guotai Junan Securities research
According to our statistics, from 2020, multiple large hydropower stations will be put into production in my country, with a total installed capacity of nearly 40 million kilowatts.
Among them -
The Wudongde-Baihetan Power Station of the Three Gorges Group (except for the first batch of units that were officially put into production on June 29, the remaining units will be completed before the end of 2021; the first batch of units in Baihetan will be put into production in 2021, and the remaining units will be completed before the end of 2022).
According to the Three Gorges Group's commitment to avoid competition among peers, after the Wubai Power Station is put into production, it will inject Yangtze River Power in the future. At that time, the installed capacity of Yangtze River Power is expected to grow by more than 50%.
▼ Yangtze River Power installed capacity is expected to grow by 53%
Data source: Wind, Guotai Junan Securities Research
Yalong River Hydropower's Yalong River Middle Tour Power Station (currently under construction in Lianghekou and Yangfanggou, and the first batch of units in Lianghekou will be put into production in 2021).
Yalong River Middle Tourist Power Station has a total of 11.845 million kilowatts. Currently, Lianghekou and Yangfanggou are under construction, and will be put into production from 2021 to 2023. The remaining mid-climb units have not yet started construction. After all mid-climb units are put into production, the installed capacity of the Yalong River hydropower is expected to grow by more than 80%.
▼ Yalong River hydropower installed capacity is expected to increase by 81%
Data source: Wind, Guotai Junan Securities research
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